Cramer's 'Mad Money' Recap: Awash in Negativity (Final)

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NEW YORK ( TheStreet) -- "Don't try and out-think the market. Good things can happen," Jim Cramer told his "Mad Money" TV show viewers after a stellar day on Wall Street.

Cramer said the bears who have felt that nothing good would ever happen have lost control, and that could lead to a market rally through year's end.

Cramer recounted how he was a perpetual bear, back in 1988 in the middle of the S&L crisis. He said back then, the Dow Jones Industrial Average stood at 2098 and he was certain that there was nothing that could ever lift the technology sector.

But then, from out of nowhere, Intel ( INTC) released a new chip that changed everything. The market was then riddled with takeovers and for the next four years, all the way to Dow 4600, the market never looked back.

Cramer told his viewers to learn from his mistake and not to be fooled by misplaced convictions. He said that no one seems to believe the debt deal in Europe will last, but what if they're wrong? What if Europe actually rebounds? Cramer said those who feel this is a half-baked plan that won't solve anything will be left in the dust.

The bears need a total collapse of debt talks in order to win, he said, but eventually they will have to capitulate as the need to make yearly targets loom. The bears will be forced to change their minds, said Cramer, and that means the markets will rally through year's end.

Cramer said his new strategy is to buy all the market dips through new years. He also advised not selling into big rallies like today. "We'll be revisiting this Europe crisis from much higher levels," Cramer concluded.

China's Big Market

In the "Executive Decision" segment, Cramer sat down with Frits Van Paasschen, president and CEO of Starwood Hotels ( HOT), whose stock has risen 25% in the past 30 days but is still 12 points off its 52-week high. Starwood just announced a three-cent-a-share earnings beat on a 9% rise in revenues.

Van Paasschen said that Starwood's strategy is simple, "happy associates makes for happy guests which makes for happy investors." He said that all over the world, at 1100 locations, guests are experiencing the Starwood brand through its associates, all of which are passionate about what they do.

Another bright spot for Starwood is China. Van Paasschen said the company has 100 hotels under construction in China and the market is so important to the company, he moved its headquarters there. With 170 cities in China having a population of over 1 million people, Van Paasschen said there is a huge opportunity for Starwood.

Looking at the world as a whole, Van Paasschen noted that never before has there been such a move from poverty to prosperity. That move, he said, translates into more travel, more vacations and more business meetings, all of which need more hotel stays.

When asked about recent analyst downgrades of Starwood, Van Paasschen said that analysts look at headlines instead of what really matters, the trend lines. He said the U.S. budget crisis, European crisis and Japanese tsunami have all caused its stock to fluctuate, but through it all, business has remained solid and growing.

Cramer called Starwood yet another example of an exciting company that's under-appreciated on Wall Street.

Groupon's Red Flags

In the Thursday "Sell Block" segment, Cramer make a preemptive strike on the coming IPO of Groupon, which is set to begin trading next week under the ticker GRPN. Cramer said that Groupon is the most hyped, most artificial IPO since the dot-com era began and investors should steer clear of this stock at all costs.

Cramer said Groupon's IPO is being engineered for the big first-day pop seen by the likes of LinkedIn ( LNKD), HomeAway ( AWAY) and Zillow ( Z). The tiny sliver of stock being offered, he said, guarantees shares will rise at the open, as money markets will be forced to buy shares in the open market in order to complete their positions.

How tiny is tiny? Cramer said LinkedIn, HomeAway and Zillow offered 8%, 10% and 13% of their total shares outstanding in their IPOs. Groupon will be offering only 5%. Cramer also noted that LinkedIn, HomeAway and Zillow are now trading down 10%, down 10% and down 20% respectively from their IPO prices.

In addition to the shady underwriting of the IPO, Cramer also called out the hype surrounding the IPO. He said the company talks about enormous market opportunities and how it dominates that market, but in reality, Groupon hasn't turned a profit no matter how big it grows. The company was able to break even in North America last quarter, but only after slashing marketing expenses, the same ones it says it needs to keep growing.

Given the company's questionable accounting issues and increased competition, Cramer said it will only take one stumble for this extremely high-valued stock to get torn to pieces. He said if investors can get in on the pre-IPO shares, they should buy some, but only if they sell those shares as soon as the market opens.

Innovative Security Software

In his second "Executive Decision" segment, Cramer sat down with Vivek Ranadive, chairman and CEO of Tibco Software ( TIBX), a software company that helps businesses anticipate customer needs by providing realtime access to disparate databases.

Ranadive gave several examples of how his company helps businesses. He said in India, Tibco has helped a cell phone carrier realize that if a customer experiences six dropped calls, it's likely the customer will cancel the service. Tibco not only spotted this trend, it alerts the carrier on the fifth dropped call so it can contact the customer.

Tibco also helps casinos monitor guest activity in real time, helping to link up those who are losing money to meals and entertainment to help soften the blow and keep them coming back for more. While in cyber security, Ranadive said that Tibco doesn't "build bigger locks." Instead it scans for suspicious activity and shuts down systems before the attack begins.

Ranadive said that putting information into a database is like having a phone that never rings. Tibco makes it so the data finds you.

Cramer said he remains a supporter of this innovative software company.

Lightning Round

In the Lightning Round, Cramer was bullish on Randgold Resources ( GOLD), SPDR Gold Shares ( GLD), Gamestop ( GME), Honeywell ( HON), Devon Energy ( DVN), EOG Resources ( EOG) and Cummins ( CMI).

He was bearish on Spirit AeroSystems ( SPR), Macquarie Infrastructure ( MIC) and American Axle ( AXL).

Closing Comments

In his "No Huddle Offense" segment, Cramer said it's embarrassing how many bears have suddenly become bullish. He said the time to become a bull was weeks ago.

Cramer said he can forgive the bears coming into October, but by October 17, with bullish earnings reports rolling in, Cramer said that was the time to stick your neck out and buck the bearish trend. Last week was the crucial moment, said Cramer, but only a few analysts and technicians had the guts to make the bullish call.

"People will be going positive all over the place now," said Cramer, but we already know who the true pundits are.

--Written by Scott Rutt in Washington, D.C.

To contact the writer of this article, click here: Scott Rutt.

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At the time of publication, Cramer was not long any stock mentioned.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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